Cash value earns interest on the basis of a cash market rate of interest. For some universal policies, it may also be tied to a specific market index. Every decision you make will improve your cash value and help you to pay your premium. It can be beneficial to reduce your monthly payment if your financial circumstances change.
Doing so will reduce your cash value. If there isn't enough, you will have to make the difference, or your policy will be canceled.
If you are looking to purchase lifelong insurance, universal life is the best option. Universal life insurance can provide a guaranteed loss benefit. It also allows you to access the policy’s cash value.
Universal life is flexible to get a permanent life insurance policy and build cash value. The premiums are flexible: you can raise or lower payments within certain limits set by the insurance company. It can be a solution to cover people with variable incomes because the cash value also allows them to make withdrawals and policy loans.
Like all permanent life insurance, it has a built-in cash value that grows over time and earns interest. You can take out policy loans against the cash value, pay your premiums, or even use your coverage for cash to supplement your income in retirement.
You will see cash value growth as long as you continue paying your premiums for your universal insurance policy. Depending on the policy you select, you might need to pay an upfront premium or a fixed monthly fee.